Today, 23andMe has expanded into more than 1,000 different locations across the United States and Canada. It now offers consumers a way to discover their ancestral roots through DNA analysis. And if you’re not familiar with 23andMe, it’s a personal genetics and biotech company based in California, which provides consumers with access to their own genetic profiles and health-related information.
But how does 23AndMe make a profit? What do they sell exactly? That s what we aim to answer today. We will discuss its business model in detail and discover what type of revenue it has.
23andMe sells its own DNA tests but also licenses its customer base to pharmaceutical companies for research purposes. The company’s main source of revenue comes from selling access to its customer base to drug companies.
Let’s take a look at the company’s revenue model and see if we can figure out why they’re
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About 23andme
23andMe is a genetic testing company founded in 2006 with the purpose of helping people understand their own personal genetics and family medical histories.
23andMe is an online DNA testing company that offers a free test kit. It sells the results to pharmaceutical companies that use them to develop new drugs.
23andMe has several unique features which set them apart from its competition.
- the size of its gene pool
- the altruistic appeal for contributing to open source projects
- the fact that people are contributing their own personal information instead of being paid for it
- she’s charismatic, casual-dressed, and has a
Business Model of 23andme
After 23andMe got into trouble with the FDA for selling unapproved drugs and devices, they had to start changing their business models.
Home testing has been growing steadily since 2010 but has slowed down in recent years.
As a result of their home testing service, 23&Me has access to a very large number of people who use their services. Their current revenue stream comes from selling genetic tests for health conditions, but they could easily sell something else in the future.
According to this history, 23andMe’s primary strategy for building its brand was using direct-to-consumer (DTC) genetic tests, health-related questionnaires, and a mobile application to continue to grow its database.
It has such a huge database that it has an advantage in the pharmaceutical industry.
It is in collaboration with pharma companies so it doesn’t have to create and sell these drugs on its own; instead, it can work together to develop them.
How Does 23andme Make Money?
23andMe has diversified into several different business models including DTC genetic tests, but they’re expected to shift focus towards developing drugs for treating diseases.
DNA Home Testing/DTC Genetic Testing
Previously costing $1,000, 23andMe now costs just 99 dollars. DTC genetic testing, aka direct-to-direct consumer (DTC), gives consumers access to lab tests at an affordable price.
Testing can be done in two ways: Ancestry and medical.
Of course, ancestry.com helps people trace their ethnic origins and which combinations they may be. For example, a person who identifies themselves as “European” could show up as having 99 percent European heritage, and 1 percent African. A person who identifies themselves as Black would show up as having 80 percent African and 20 percent Native American.
Ancestry.com’s strongest competitor for this market would be 23andMe.
Genetic tests are used to discover genetic predispositions to specific diseases, such as cancerous tumors. However, the Food and Drugs Administration (FDA) considers these tests to be drugs and, therefore, subject to all the rules associated with any prescription medication.
As a result, 23andMe has faced some legal challenges regarding its marketing of genetic tests outside the US. They’ve been able to market their full genetic test service in Canada and the UK without FDA clearance.
A compromise has been made between the FDA and 23andMe, allowing them to market certain health-related tests for sale.
Proprietary Database
According to CEO Anne Wojcicki, 23andMe boasts the largest human genetic databases on the entire planet. Many people proclaim 23andMe the Google of human genetics!
There may be some legitimate concerns regarding the collection of personal genomic information by companies like 23andMe, but Wojcicki promises that the company will never share its users’ personal genetic information without their explicit permission.
Before analyzing their DNA, 23andMe requires its users to complete a Terms of Services (TOS) agreement, which grants them permission to use the results of the analysis for commercial purposes.
She says that most people willingly give up their genetic data for altruistic reasons — they’re trying to help others by preventing or curing disease.
You may opt-out of having your DNA profile uploaded to our database, which would prevent us from using your DNA information for research. However, we cannot remove your genetic information from our database without your permission.
Because insurance companies may use this data to raise their rates for consumers, Google CEO Sundar Pichai has explicitly stated that he wouldn’t share identifiable user data with insurers.
Even if she doesn’t plan to monetize her own personal dataset, the database of aggregated user information should be quite easy to market for other purposes.
Therapeutics
According to the market research firm CB Insights, Therapeutics has the highest potential for future revenue generation among all of 23andMe’s segments.
Therapeutics is the department at 23andMe where most people start out working. It’s also the department where most new hires come from.
GlaxoSmithKline (GSK), the pharmaceutical company, has entered into a joint venture agreement with 23andMe, the personal genetics testing firm. Under the terms of the agreement, GSK will pay 23andMe $1 million per year for five years. If the two firms develop a drug that treats a disease, they will split the profit equally.
- late-onset Alzheimer’s disease
- Parkinson’s disease
- celiac disease
- hereditary thrombophilia
- alpha-1 antitrypsin deficiency
- glucose-6-phosphate dehydrogenase deficiency
- early-onset of dystonia
- factor XI deficiency
- Gaucher’s disease
- Carrier testing for Bloom’s disease
- Three specific BRCA mutations (BRCA1 c.68_69delAG; BRCA2 c.5266dupC) are the most common among people of Ash
Early in 2020, Almirall bought the rights to market the first in-home drug created by 23andMe, “a bispecific monoclonal antibody designed to block all three isoforms of interleukin 36 (IL-36) cytokines”.
It will be used for the treatments and/or prevention of various inflammatory diseases and skin disorders.
Health-related Surveys
23andMe collects 30,000 user survey responses for each test subject. These responses are valuable because they provide another type of information.
Participants can participate in the study anytime they want, for five minutes or 50 minutes. They contribute to over 230 different projects.
Topics include Parkinson’s disease, lupus, asthma, and more. These topics have led to the publication of 172 research articles in collaboration with some of our most prestigious partners, such as Harvard University, Stanford University, Columbia University, Cornell University, New York University, and more.
- University of Rochester
- McGill University
- Queensland University of Technology
- John Hopkins University
- Michael J. Fox Foundation
- University of Edinburgh
- Vanderbilt University
- UCSD
- Uppsala University
- University of Cambridge
- University of Dundee
- Duke University
Health App
By launching an online health platform, 23andMe has been able to create a new revenue channel for itself. Additionally, this platform provides a huge amount of data that could be used for research purposes.
23andMe has integrated its DNA test into Apple’s Research Kit app. This app lets people take part in large-scale medical research studies like Mount Sinai Asthma health and Stanford Medicine’s My Heart Counts study.
If you don’t own an Apple product, Google Fit is another option for tracking fitness activity. It also works with 23andMe.
Google Fit has teamed up with the World Health Organization (WHO) to create Heart Points, a feature that lets people track their daily activities and set goals for reaching them.
According to WHO’s recommendations for physical activity, 30 minutes of brisk walking 5 times per week reduces the risks of cardiovascular diseases, improves sleep quality, and enhances overall mental health.
23andme Funding and Revenue
23andMe’s investment has increased 8 times over the past eight-year period.
They should be able to attract funding if needed from investors like Richard Branson and Warren Buffet.
However, revenues have declined by almost 50% since then.
Is 23andme Profitable?
At this point in time, 23andMe isn’t making any profits. As demand for genetic testing decreases, so too does revenue.
The company reported a net income of $42 million in its Q1 earnings report for the fiscal year 2020, an improvement of 16.67% compared to a net income of $36 million in Q1 2019.
However, it should be noted that the drug created by Almirall in collaboration with 23andMe is relatively new to the marketplace.
It seems that the decline in profits was due to 23andMe’s old business strategy of offering home DNA tests instead of focusing on the new therapeutics market.
Furthermore, 23andMe was only recently acquired by an investment firm called Veritas Capital, which is now known as 23andMe Holding Company. It trades on the NYSE under the ticker symbol “23NDM” and its shares are currently priced at $26.00 per share.
It hasn’t been fully fiscal for a year, so those revenues aren’t yet in. Shares rose by 21 percent on their debut.
Conclusion: How Does 23andme Make Money?
23andMe makes most of its revenues from sales of at-home DNA tests and sells consumer genetic data to various healthcare organizations for research and development (R&D) uses.
23andMe offers an at-home saliva test to help people analyze their DNA and learn about their heritage and inherited characteristics. It also offers genetic tests for certain health conditions.
Apart from those products, 23andMe offers genetic testing and facilitates the storage of customer DNA in a secure way, and allows customers to download their raw genetic information from the server for further analyses or processes.
We sincerely thank you for reading our article. We believe it has helped you gain a deeper insight into 23andMe’s revenue model. It is important to know how this company fits into the broader context of genetic testing and health care.
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